Producing A Healthcare Documentary | with Chelsea & Donovan Ryckis

This video provides an in-depth exploration of the crisis in U.S. employer-sponsored healthcare, focusing on the critical role of fiduciary responsibility, transparency, and aligned incentives in benefits consulting. Featuring Chelsea and Donovan Ryckis of Ethos Benefits, the discussion covers their journey from traditional financial services and personal healthcare trauma to founding a benefits agency based on the principle of acting as a fiduciary. The conversation highlights the systemic failures that lead to massive cost inflation for employers and employees, arguing that the industry's traditional compensation structure—where brokers are rewarded for premium growth and plan retention—is fundamentally misaligned with client interests.

The Ryckises detail how they leverage data and transparency to achieve dramatic cost savings, citing a case where they mitigated a 40% renewal increase for an employer by moving them to a self-funded plan, resulting in hundreds of thousands of dollars in savings and better benefits for employees. This success underscores the massive waste prevalent in the fully insured model, often summarized on a single page with no claims data or justification. Their approach emphasizes the necessity of unbundling services, utilizing data to identify cost drivers (like high-cost specialty drugs such as Spinraza), and proactively managing high-utilizer claims, rather than simply passing costs to the entire employee population.

A significant portion of the discussion is dedicated to the documentary they helped produce, "It’s Not Personal, It’s Just Healthcare," which aims to educate decision-makers on the industry's misalignments. The film serves as a powerful call to action, leveraging the anger and curiosity of viewers—including HR professionals, CFOs, and clinicians—to inspire change. The speakers stress that the complexity of healthcare is often intentionally exaggerated by incumbents to discourage employers from seeking alternatives. They advocate for employers to ask simple, persistent questions ("Why is it that way?") to uncover hidden costs and conflicts of interest.

The conversation concludes by emphasizing the imminent impact of the Consolidated Appropriations Act (CAA) of 2021, particularly the compensation disclosure requirements. This legislation is viewed as a watershed moment that will expose conflicts of interest and fuel an escalation of employer lawsuits over healthcare plan mismanagement. The Ryckises predict a flood of litigation, arguing that the public availability of Form 5500 data and compensation disclosures will enable law firms to easily identify and target companies with egregious premium growth and misaligned broker relationships. They also touch on the challenge of the proliferation of point solutions, advocating for employers to focus on clear Key Performance Indicators (KPIs) like pharmacy spend, rather than getting overwhelmed by the noise of hundreds of digital health vendors.

Detailed Key Takeaways

• Fiduciary Responsibility is the New Standard: The benefits consulting industry is rapidly moving toward a fiduciary standard, similar to financial advising. Consultants must legally and ethically act in the client's best interest, disclose all compensation, and avoid conflicts of interest. Failure to adopt this standard exposes employers to significant legal liability.
• The CAA 2021 is a Watershed Moment: The compensation disclosure requirements under the CAA, mandating service providers making over $1,000 to disclose all direct and indirect compensation, will be the biggest driver of change since the ACA. This transparency will expose misaligned incentives, particularly bonuses tied to plan retention and premium growth.
• Employer Lawsuits Will Escalate: The combination of regulatory transparency (CAA) and public data access (Form 5500) will lead to a "flood" of employer lawsuits regarding healthcare plan mismanagement. Companies failing to act as prudent fiduciaries will be held accountable, making this a critical risk management issue for executives and HR leaders.
• Self-Funding Unlocks Massive Savings: Moving from a fully insured model to a self-funded, unbundled approach—even for mid-sized groups—can yield immediate and substantial savings (e.g., mitigating a 40% increase). This requires deep data analysis, aggressive sourcing of services (like PBMs), and proactive claim management.
• Broker Compensation Must Be Aligned: Traditional commission models incentivize brokers to retain expensive plans and grow premiums. Agencies must shift to a fee-based model where compensation is structured around performance and value delivered (e.g., flat PMPM fee), making it easier to justify compensation increases after demonstrating significant savings.
• Data is the Key to Cost Control: The lack of claims data provided in traditional renewal summaries is a major problem. Employers must demand and utilize claims data to set clear KPIs (e.g., lowering pharmacy spend) and evaluate vendors, rather than accepting generalized renewal increases.
• The Problem of Point Solution Overload: The healthcare system is plagued by "thousands of point solution vendors," creating confusion and complexity for end-users and employers. Strategy should focus on core cost drivers (like pharmacy and medical claims) and simplifying the benefit experience, rather than adding more fragmented solutions.
• Culture and Talent Retention are Linked to Values: Agencies committed to fiduciary principles experience high client and employee retention. Hiring based on shared values (like transparency and a desire to fix the system) leads to a highly capable and loyal team, reducing the significant cost of turnover.
• Start with Simple Questions: For employers overwhelmed by complexity, the first step is to simply ask better questions of current providers, such as "Why is it that way?" or "Why are we being recommended this strategy?" This opens the door to understanding underlying incentives and exploring alternatives.
• The Parallel System Must Be Simple: For alternative, unbundled healthcare models to succeed, they must be as simple and consumable for the end-user (employee) as the system they are replacing, despite the underlying complexity of managing multiple vendors.

Key Concepts

• Fiduciary Approach: A legal and ethical standard requiring a consultant to act solely in the client's best interest, disclosing all compensation and conflicts of interest.
• Consolidated Appropriations Act (CAA) of 2021: Federal legislation mandating increased transparency in healthcare, most notably requiring service providers to disclose all direct and indirect compensation to the plan sponsor.
• Self-Funding/Unbundling: Moving away from a fully insured model to where the employer assumes risk and contracts separately with a Third-Party Administrator (TPA), Pharmacy Benefit Manager (PBM), and other cost containment solutions.
• Performance-Based Compensation: Structuring consultant fees based on delivering measurable value (e.g., flat PMPM fee or percentage of savings achieved) rather than a commission tied to premium volume.

Examples/Case Studies

• The Cobra High-Utilizer: An employer saved over a quarter million dollars in premiums by intervening with a Cobra member over 65, moving him to Medicare and his disabled dependent to an ACA plan. This individual was costing the plan three times the average claim cost.
• High-Cost Specialty Drug: A discussion of a single individual accounting for 60% of a plan's spend due to a $600,000 annual injection (Spinraza). This illustrates how one high-cost claim can disproportionately affect all employees and the need for effective medication sourcing and patient assistance programs (PAPs).
• 40% Renewal Mitigation: A client facing a 40% health insurance increase was moved to a self-funded plan, mitigating the entire increase, improving benefits (HMO to PPO), and saving the employer hundreds of thousands of dollars, demonstrating vast overpayment in the previous fully insured arrangement.